Description

Mexico Retail Report Q2 2016 Description

BMI View: Growing household income will continue to drive growth in the middle class and uplift theMexican population over the 2016-2020 forecast period. Rising employment and a stable political andeconomic outlook will dampen volatility in the country and foster steady growth in household spending, asmore disposable income becomes available to consumers, despite the effect of recent interest rate hikes.

Together, these factors will expand the consumer market and bolster consumer confidence, creating afavourable environment for retailers as internal consumption and economic activity expand. Growth acrossall sub-sectors will be strong, but e-commerce and online sales can be expected to see explosive upwardtrajectory. Additionally, the food & drinks sub-sector will continue to see the emergence of higher valuepremium brands as consumers seek more aspirational products and brands.

Key Views & Developments

We expect household consumption to continue to improve, thanks to a stronger labour market(unemployment stands at 4.1%, beating the US's 5.0%), and higher wages. This will be further supportedby low inflation), which will help support real purchasing power.